State Orders NLB to Protect Assets in Croatia

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Slovenia claims the issue was settled in the 2013 Mokrice agreement.

STA, 9 April 2018 - Slovenian Sovereign Holding (SSH) has ordered Slovenia's biggest bank, NLB, to take measures to protect its assets in Croatia against the rulings of Croatian courts over Yugoslav-era deposits. The state asset custodian has also tasked NLB supervisors with drafting a report on the claims that the bank has already settled.

The move comes after the government ordered SSH as the sole shareholder of NLB on 21 March to implement the decision that the rulings of Croatian courts against NLB over Yugoslav-era deposits are unlawful.

According to the government, the issue of Yugoslav-era foreign currency deposits at LB, NLB's predecessor, is a matter of succession to the former Yugoslavia.

Croatia agreed to it being treated as part of succession issues in the 2013 Mokrice agreement, but later redefined it as a dispute between banks, so Croatian courts continue to process lawsuits against NLB over the matter.

NLB must now take measures in a way that will ensure that the Slovenian legal order and international agreements are respected.

Above all, NLB must continue disputing the rulings at all levels in Croatia and internationally, take measures in managing assets to prevent or at least limit the enforcement of NLB's assets in Croatia and consider Slovenian interest in asset management.

Meanwhile, SSH also ordered NLB's supervisors at today's shareholders meeting to prepare a report by 31 May on the reasons why the bank had settled claims stemming from a ruling of the Zagreb Higher Court, including all relevant documents for management bodies, external legal opinions and potential advisors the bank had ordered in the matter or other matters pertaining to the Yugoslav-era foreign currency deposits.

Finance Minister Mateja Vraničar Erman said that the bank had been instructed already in 2015 to start withdrawing its assets from Croatia.

The bank has followed instructions, but it has to find a balance between protecting itself against potential enforcement of court rulings on the one hand and the potential damage stemming from limited operations on the other, the outgoing minister added.

She also said that the government had been striving to protect NLB since May last year, both to protect its value and to allow the state to fully enjoy the benefits of ownership while it still owns the bank.

Vraničar Erman announced she would soon present a set of measures to coalition partners. However, opinions of the European Central Bank and the European Commission on them will have to be considered with regards to NLB's operations and from the aspect of presenting state aid.

The parliamentary Constitutional Commission also discussed today an expert opinion on how to proceed with shielding NLB from paying damages in Croatia, but decided to appoint constitutional experts to the group of experts advising it before launching the procedure to amend a relevant constitutional law.